What You Can Learn from JD’s Stock Repurchase Program

JD.com (NASDAQ:JD) plans to put some money back in shareholders’ pockets. On March 17, the company announced a $2.0 billion stock repurchase program, which is equivalent to nearly 4.0% of its market value. Notably, this is the biggest JD stock repurchase plan since the company went public in 2014 and its third repurchase program. Previously, JD announced $1.0 billion repurchase plans in 2015 and 2018.

JD stock repurchase program, management’s confidence

The latest JD stock repurchase program comes as companies around the world grapple with the effects of the coronavirus. The deadly virus broke out in China—JD’s home market.

For JD to declare the huge stock repurchase program during these troubling times, investors can see that the company’s management is confident about weathering the coronavirus storm. While Alibaba issued a revenue warning due to the coronavirus, JD actually forecasts at least 10% revenue growth in the current quarter. The company intends to fund its latest repurchase program with existing cash. JD finished 2019 with $9.3 billion in cash reserve and recently sought to raise $1.0 billion more.

Also, JD is profitable and expects to continue growing its sales despite the coronavirus disruption. The company should be able to keep adding to its cash reserve.

For the fourth quarter of 2019, JD reported improved financial results from a year ago and beat the consensus estimates. The stock rose more than 12% due to the strong earnings.

JD and eBay plan to reward shareholders

With JD’s latest stock repurchase program, it joins fellow e-commerce provider eBay (NASDAQ:EBAY) in plans to put billions of dollars back in investors’ pockets. eBay has committed to buy back $4.5 billion of its shares this year. eBay’s repurchase program got a boost after the company sold its online ticketing business StubHub.